Mahindra and Mahindra ² Implementing BPR Submitted by:Harshal Chichghare Krishna Kaushal Kartikeya Sharma Kumar Raunak Nikhil Garg 73 77 78 79 82 Introduction The Mahindra Group µs history dates back to 1945 In October 1947, the first batch of 75 jeeps was released for the Indian market. Over the next few decades, the group promoted many companies in areas as diverse as hotels, financial services, auto components, information technology , infrastructure development and trading to name a few. However, the two main operating divisions were the automotive division and the farm equipment division. Mahindra employed over 17,000 people, had 33 sales offices with a network of over 500 dealers across the country. The Kandivili plant was the production hub for farm equipment division. In 2001, this division marked its 16th year as the market leader, with its product being used by over 600,000 indian farmers. About BPR The philosophy that BPR follows is that radical redesign and reorganization is necessary to lower costs and increase the quality of service. Instead of focusing on existing business, it tries to determine what business the company should be involved in. Thus BPR results in dramatic and huge improvements. Reasons for Implementing BPR M&M¶s ambition to become the largest tractor manufacturer in the world. To enhance productivity and deliver world class quality at the least possible cost. M&M¶s plants were suffering from manufacturing inefficiencies, poor productivity, long production cycles and suboptimal outputs. The plants at Kandivili and Igatpuri in particular were under-productive, militantly unionized, and had bloated workforces. BPR Principles PRINCIPLE Organize around processes, not tasks EXPLANATION Keep interdisciplinary teams that concentrate on completing a process. Have output users perform the process Have one department responsible for one complete process. Have those who produce information process it Treat geographically dispersed resources as centralized Link parallel activities in the workflow instead of just integrating their results Empower workers and use built-in controls Capture information once and at the source One person generating a certain information also processes it till end. An organization¶s data should be centrally located and made available to all. Improve communication through inter-linkage to better all processes. Give more authority to those working directly to enable quicker decision making. Store all data electronically to avoid inefficiency, resource wastage and data discrepancy errors. Effects of BPR BPR seeks to remove the belief that by focusing on the efficiency of the tasks involved in carrying out a piece of work, the organization is doing its best to complete the task in a timely and cost-effective manner. Instead, it requires the organization to focus on the outcomes of its processes in the way a customer would. The effect of BPR Work units change from functional to process teams Jobs change from simple tasks to multi-dimensional Roles change from control to empowered Advancement criteria changes from performance to ability Executives change from scorekeepers to leaders Performance measures change from activity to results Phases involved in BPR Process Improvement Understanding of the entire business cycle. Improvements through eliminating nonvalue ±added activities. Process Redesign Total redesign of an end-to-end process. Considerable performance improvements in terms of cost, quality and cycle time. Business Transformation Study of basic elements of people, processes and IT involved by top management. A top-down reappraisal and redesign of the total business. BPR success factors Reengineering is usually opted when companies are in trouble, have foreseen one or are avoiding landing into one. BPR exercises generally fail because the concerned companies do not ensure the presence of critical success factors. Such factors are: BPR SUCCESS FACTORS Strong and consistent top management sponsorship. Addressing cultural transformation through effective change management. Proven methodology including a vision process. Reengineering team composition (in both breadth and Knowledge). Compelling business case for change (with measurable objectives). Strategic alignment with company strategic direction. Line ownership (pair ownership with accountability). M&M·s experience with BPR After BPR¶s implementation around 100 officers produced 35 engines a day as compared to the 1200 employees producing 70 engines in the pre-BPR days. After the union strike ended M&M could then focus on major issues such as reengineering the layout and method of working, and productivity. The entire company was synchronized with the notion of customer satisfaction, wherein the end product was made keeping the customers in mind rather than going about their usual way of being product centric. Features of concurrent engineering were brought in. The R&D department was divided into three phases, with each having their specific requirements. IT was implemented soon thereafter to integrate all the information gathered so that all departments were up to date at all times. Results of implementing BPR After the implementation of BPR the number of engines produced went up by 125 per day on an average. The excess workers could now be deployed at different locations where the workforce was indeed needed. Employee costs got reduced significantly from 12.4% in 1994 to 10.1% in 1996. The number of vehicles started increasing rapidly per annum. BPR initiatives enabled the company to maintain steady gross margins, reduce working capital levels and rationalize manufacturing process. The manufacturing systems were brought upto international standards. There was better inventory control, better sourcing, better order distribution across plants, online availability of data, transparent access to data, process transparency and an integrated sales and supply chain. The workers became more productive where, instead of earlier disputes during the preBPR days, now they worked more diligently. The Future The programs implemented saved 20-30% on business redesign, 10-15% on process redesign and 5-10% on engineering redesign. The company also started outsourcing its manufacturing activities to improve quality Future The company continued with its efforts to further streamline its operations by undertaking cost saving programs to break-even volumes in the automotive and farm equipment divisions. M&M decided to adopt other globally accepted practices to improve its business.